The economics of orchards: An exercise in point-input, flow-output capital theory

Tapan Mitra, Debraj Ray, Rahul Roy

    Research output: Contribution to journalArticle

    Abstract

    This paper is concerned with the qualitative properties of optimal intertemporal programs in a model of point-input flow-output capital theory, when future utilities are discounted. Under a mild condition on the flow-output vector, we establish that optimal programs for every discount factor and every initial state (other than a unique stationary optimal state) will exhibit non-convergence. Furthermore, we provide a necessary and sufficient condition on the flow-output vector for which a neighborhood turnpike theorem holds; that is, long-run fluctuations on an optimal program are "small" when the discount factor is "close" to unity.

    Original languageEnglish (US)
    Pages (from-to)12-50
    Number of pages39
    JournalJournal of Economic Theory
    Volume53
    Issue number1
    DOIs
    StatePublished - Feb 1991

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    ASJC Scopus subject areas

    • Economics and Econometrics

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